23-261MR Fintech company pays penalties for crypto product representations
Following ASIC action, fintech company Bobbob Pty Ltd has paid $53,280 to comply with infringement notices regarding representations it made about a crypto-asset linked investment product.
ASIC was concerned that Bobbob made the following representations that had the potential to mislead consumers that the crypto-asset linked investment product:
- was approved or licensed by ASIC,
- was similar to, and therefore shared some attributes of, a bank account including the risk profile,
- was a safe and stable investment with minimal risk of customers incurring capital losses, and
- earned all customers an interest rate of 7.6% per annum from the time they invested.
ASIC Deputy Chair Sarah Court said, ‘ASIC was concerned Bobbob’s representations potentially misled customers about the product’s approvals, risks, characteristics and benefits. As a result, customers may not have fully understood the product they were investing in.’
During the eight-month period the Savings Product was offered, approximately 700 customers deposited funds totalling around $1.6 million.
ASIC has also accepted a court enforceable undertaking from Bobbob and its sole director Mr Byron Goldberg regarding the representations. The undertakings include that:
- Bobbob and Mr Goldberg will each cease to be an authorised representative of the Australian Financial Services licensee which authorised Bobbob to offer the product,
- Bobbob will not provide financial services to retail clients for 12 months, and
- Mr Goldberg will himself, not provide, and not be involved in managing a business that provides, financial services to retail clients for 12 months.
‘ASIC will continue to take enforcement action regarding the allegedly misleading promotion of crypto-asset based products that could harm consumers. Crypto-assets can be highly volatile, inherently risky and complex, making it essential that investors receive accurate information,’ concluded Ms Court.
Bobbob paid the infringement notices on 20 September 2023. Payment of an infringement notice is not an admission of guilt or liability.
The specific reasons for ASIC’s concerns are set out in the four infringement notices published on the Infringement notices register and the court enforceable undertaking, which has been published on the Court enforceable undertakings register.
Background
From 1 April 2022 to 1 December 2022, Bobbob offered the crypto-asset based investment product to Australian consumers. Bobbob has returned all customers’ funds (with interest) since it ceased offering the product.
Generally, ASIC will only accept a court enforceable undertaking when we consider it achieves an effective regulatory outcome, after having weighed the regulatory outcomes offered by other enforcement remedies.
We look to several factors, including the nature and seriousness of the alleged misconduct in considering whether to accept a court enforceable undertaking. Importantly, in this case, no consumer loss was identified.
Court enforceable undertakings can be used to complement or enhance other enforcement actions. However, ASIC will not usually accept a court enforceable undertaking:
- instead of pursuing criminal court proceedings,
- where the misconduct is deliberate or involves a high level of recklessness, or
- after a matter has been referred to an ASIC delegate or another specialist body.
Further guidance on how ASIC uses court enforceable undertakings can be found in Regulatory Guide 100 Court enforceable undertakings.
ASIC Information Sheet 225 Crypto-Assets assists entities providing crypto-asset related products and services to understand their regulatory obligations.
ASIC’s Moneysmart website has information for consumers about the risks of investing in crypto-assets,
